Commentary: Whose at fault for high-priced drugs?

Friday

Jul 21, 2017 at 2:11 PMJul 21, 2017 at 2:11 PM

By Dr. Doug Hubbard

I was once again pleased to see a commentary about "Fault for high-priced drugs lies with drug makers.” And I was once again disappointed by the content of the article. It rightly places blame for the explosion in drug prices at the feet of the manufacturers. The author is a pharmacist and attorney who until recently served as a vice president at OptimumRx, a UnitedHealth Group company. I daresay he has not filled a prescription or educated a patient about their medicine in a long time.

He points out that drug companies set the price of the product and can charge whatever they want. But he also goes on to give credit for the prices not being worse to the PBMs, Pharmacy Benefit Managers, who work for health plans, unions, and employers (read health insurance providers) to try to negotiate lower drug costs for enrollees. PBMs are employees of the insurance companies and third-party providers, and their purpose is to maximize profits for their employers. Any lower costs that actually get passed on to the consumer are incidental.

The author goes on to praise the Medicare Part D prescription benefit as being the best example of PBMs at work. Plan D has definitely been of great benefit to its members, but it has been a huge profit machine for drug manufacturers and insurance companies. Drug manufacturers are still allowed to set whatever price the market will bear. And insurance companies are protected, through the benefit structure that allows them to stop paying for drugs once patients reach a yearly maximum, until the out-of-pocket expenses reach a catastrophic level — whereupon the insurances again cover the bulk of the costs.

This is the so-called doughnut hole. The inclusion of the doughnut hole, and the lack of government competition with the drug companies, were the conditions the lobbyists required before Congress was allowed to pass the legislation.

One of the goals of the current administration was to rein in drug price increases. The president met with the heads of the drug industry within a few days of taking office. And he admonished them, saying "You have to do better." They aren't.

There are some good answers to this problem. Space here precludes enumerating them all. However I can sum the concept into a single word, a strategy that is dear to both consumers and well-run businesses — competition.

For too long, drug companies have colluded and conspired to keep their profits at an all-time high, even increasing when the economy at large was not. And anytime there is a threat from Congress or the judiciary to make Big Pharma accountable, they employ a strategy of shortages of even the most commonly used and necessary drugs. Any pharmacist will attest to this.

I have witnessed many changes in pharmacy since I was licensed in 1973. Miracles. And, of course profit is a major driving factor in research. But there are ways to ensure profits and still have these miracles available to all who need them.